5 Common Payroll Issues and How to Fix Them
Payroll, the thing that makes a company work, but a lingering problem for the HR and finance department. Every month when the payroll period begins, you can hear the anxious chattering of nails being bitten just waiting for the next issue to arise.
At OPS, we deal with payroll every day, and have for the last 15 years, so we hear all the problems companies big and small face on a daily basis and were here to help. Here are 5 of the most common problems we have come across, and solutions to fix them.
Untimely Payroll Processing
Payroll is the core of every company. It is the reason most employees show up to work everyday and do their best for the company. Aside from the obvious of fines from HR ministries for late salary payments, it also has a huge impact on your employee’s engagement (studies has found that delays in salary payment lead to an increase in absenteeism by 0.6%).
But what is the main cause for this? Well, usually it is because of a lack of dedicated resource within the company. You know what it is like when your plate is overflowing, you’re bound to prioritize other tasks, and that’s what happens, payroll gets pushed to the side.
Another reason for this is no clear process in place with deadlines to be stuck to.
So, how do we ensure salaries are always paid on time?
1. Put a payroll process and documentation in place
By implementing a clear payroll process map, you know exactly what step comes next, and who the responsible party is. If you’re not sure where to start with this, ask an expert!
2. Get a payroll system that automates your payroll
If you can’t reduce your task list, and can’t afford a dedicated payroll resource, it’s time to work smarter, not harder. Find a payroll system that can automate as many of the manually processes as possible to make payroll less of a burden.
3. Outsource your payroll
Payroll is possible one of the easiest business functions to outsource. Although there are numerous benefits to outsourcing, a reliable payroll company will always ensure your salaries and paid accurately and on time.
Ineffective Time Keeping
Time and attendance are the basis of payroll, and if this is not recorded and monitored properly, then it then becomes the payroll departments problem.
Issues such as manual time keeping can easily be manipulated or forgotten about, and then your left at payroll time chasing around Keith to finally fill in his timecard, time which could be much better spent growing your company, or result in employees being underpaid of overpaid, which then must be resolved.
So, what’s the solution? Integration. Finding a time and attendance solution which is integrated with your payroll system and automated will ensure time is saved and the data is accurate. For example with our time and attendance solution, employees can clock in easily using their mobile and you can customise the process that is they wish to alter their clock in and clock out times, the request must go through a workflow approval (approval 1 as their line manager, approval 2 as HR) and if a employee does not clock in or provide reason why they have not, it automatically gets logged as unpaid leave in your payroll system. Find out more about our time & attendance feature here.
Overtime is the process of compensating employees for additional hours worked over their contracted mandate. This can either be at their usual hourly rate, or their usually hourly rate plus a percentage increase. Now, if this is miscalculated for any employee, they’re going to be very upset, which may hurt your company’s reputation, or worse, land you a hefty fine for not complying with labour law.
To ensure this doesn’t happen it is important to ensure the following checks and balances are in place:
Know the legal standpoint with the labour law
Make sure you are clear on what the labour law outlines are the regulations for overtime in your country or jurisdiction for each job function
Have a clear overtime policy in place and make sure your employees are educated on it
Being clear from the get-go on what your rules are on overtime are to avoid any confusion later down the line
Have a clear overtime cut off day in your payroll process
When creating your payroll process map, ensure there is a clear input cut off date, so for example if your pay date is the 27th of each month, your overtime inputs could run from the 25th of the previous month until the 25th of the following month.
Lack of skills
Payroll seems to be the only function that gets divided between multiple business functions depending on the business. Not having adequate payroll knowledge can cause a plethora of problems, which might not be noticed until it too late.
Ensure whoever is running your payroll has the right knowledge to be able to process payroll correctly (p.s. we offer a fundamentals of payroll training in the Middle East course!) and that they have the correct support and systems to be able to deliver payroll accurately and timely each and every month.
To err is human, and mistakes can easily be made when you don’t fully understand the local labour law and all its interpretations. Something as small as reading the labour law and seeing employees are entitled to 30 days annual leave each year but knowing whether this is calendar days or working days can result in a higher cost to company on leave liability and miscalculated end of service benefits.
Not to worry, having a dedicated compliance partner who is there to ensure you remain compliant through training on ever changing labour laws, a system that verifies that nothing illegal is happing in your payroll and advising on best practises is the best way to avoid this mistake.
Want to know more about how OPS can help you with your Payroll?